Industry insight: Setting the course for the next generation

By BCShippingNews 11 October 2018

Mark Collins, President & CEO, BC Ferries

Mark Collins took the helm of BC Ferries in 2017 at a critical time in the organization’s 58-year history. With many vessels nearing their end of life, the ferry company is set for a wholesale change that will see fewer, more standardized classes of vessels and advanced technologies that will lower their environmental footprint even further. Another change that is evident under the leadership of Collins is the values of engagement and collaboration with coastal communities he has incorporated into their vision and mission. As BC Shipping News readers will learn from the following interview, while Collins works to address a ferry network that is at capacity, he’s doing it with the next generation in mind.

BCSN: Let’sstart by looking at the career steps you’ve taken that have led to your current position and the strengths you gained along the way.

MC: I started my career in the marine industry in 1983 as a marine engineering cadet at the Marine Institute of Memorial University in Newfoundland (as it is now called). It was a three-year co-op program that alternates between the classroom and practical work so was exposed to a number of different ships — offshore supply vessels, container ships, bulk carriers, etc. After graduating in 1986, I went to sea for a couple of years, mainly bulk carriers and fishing vessels including a freezer trawler off Greenland.

In 1988, I enrolled in St. Mary’s University in Halifax and obtained a Bachelor of Arts in Marine Geography. It was a fascinating program but you don’t see many job postings for geographers and, as I wanted to stay in the marine industry, came out to UBC to take my MBA in Transportation and Logistics.

After graduating in 1992, I returned to Newfoundland where the Hibernia Oil Project had just been approved. I got my start as the sales manager for a small marine electrical services firm. This was a turning point for me — we were a small company with about 15 staff and we beat out the likes of General Electric, Westinghouse and Siemens for the contract for the M20 Wellhead project, a component of the Hibernia project, the biggest marine logistics operation in Canada at the time.

From there, I was recruited by the Ulstein Group in 1995, which was later acquired by Rolls Royce Marine and worked my way up from sales manager to Vice President of Sales and Customer Service in the Coquitlam plant before heading over to the international division to become President of Rolls Royce Marine Italy and then Rolls Royce Marine Brazil.

Aside from a short stint as Vice President of Global Technical Services for the CSL Group in Montreal, I’ve been with BC Ferries for the last 14 years. I started in 2004 as Vice President, Corporate Engineering and Asset Development before becoming Vice President, Engineering. After leaving in 2012 to join the CSL Group, I returned to BC Ferries as the Executive Director of Project Management and was then promoted to Vice President of Strategy and Community Engagement in early 2016 before throwing my hat in the ring for the President’s position.

In looking at my work history in terms of strengths, having been to sea really resonates with me. I’ve been in that world and made my living as a ship’s crew and that really helps — I use it consciously and unconsciously every day. Also, while you may not think it, the Marine Geography Degree has really helped me understand the marine industry’s position within the world. It was some of the best education I ever had.

BCSN: What are some of the challenges BC Ferries faces today?

MC: Our number one challenge is meeting the needs of ferry users and communities. A major challenge right now is capacity. BC Ferries’ infrastructure is now running a higher throughput than it ever has and we are putting more people, cargo and vehicles through our system than at any other time in history. I have to recognize the efforts of our employees who are managing to get great efficiencies out of the system but we can see the pressure points. Long weekend line-ups and sailing waits are nothing new but we have had a few more this year because the system is so full and we have no spare ships.

So capacity and resilience are the two words that best describe our focus right now but also, affordability is never far from our mind. While that remains a priority for us, it has been overtaken by concerns about capacity and lack of resilience.

BCSN:At the Mari-Tech 2018 Con-ference in April, you described a new vision for BC Ferries that includes greater efforts for public engagement. How does this tie in with your efforts to build capacity and resiliency?

MC: If we look at the downturn that occurred between 2008 and 2014 — when traffic fell about 15 per cent — and the resulting government decision to decrease service to avoid huge increases in fares, we were faced with an extremely divisive situation. Communities were unhappy with the lower number of sailings.

We’ve since increased services as traffic volumes rebounded (in fact, we now have more sailings in total than we did before the 2012 downturn) but there was a lot of broken trust between BC Ferries and coastal communities. To avoid a replay of that time, we have developed a two-prong strategy: first, to diversify our revenue so that when traffic drops again (because it will – there’s always a cycle to the business) our revenue doesn’t collapse; and second, to build trust with communities — to get out there, really listen and understand their needs.

If we can build a trust-based relationship now when times are good, when traffic turns downward again, we’ll be in a better position to work with communities as partners to address the service together. It’s about bringing the communities and the people who use our service into the decisions that affect them.

BCSN:What about the diversification of revenue?

MC: We did some diversification in 2006 to 2008 when we started the drop trailer business and BC Ferries Vacations and that certainly helped however, those activities are not fully divorced from the normal business cycle. We need to be involved in revenue streams that move counter-cyclical to our traffic volumes.

There are two ways to diversify: first, stay in home market but get into different businesses with a different business cycle; and second, stay in the same business but move outside the market to a different geography that might move in a different cycle. So we’re thinking about opportunities like that but are mindful we don’t take on risks which will undermine our stability and sustainability at home.

BCSN:You mentioned earlier that you’re running a higher throughput than ever before. Could you provide a snapshot of current operations and your plans for increasing capacity?

MC: During our 2017/2018 fiscal year, we recorded the highest passenger counts in 20 years and the highest vehicle counts ever in our history. We delivered over 174,000 sailings to 22 million passengers and 8.7 million vehicles. On average, that’s more than 470 sailings, 60,000 people and 23,000 vehicles every day. And the trends we’re seeing for this year indicate a new record for vehicles and surpassing our all-time record for passenger volumes.

Bringing additional capacity to the system is a big part of our upcoming contract renewal process with the BC Ferries Commissioner and the Provincial Government. To allow the Commissioner to recommend a price cap, we provide our estimates of costs for operations and capital expenditures. While operating costs are fairly steady year over year, how much we plan to spend on our capital assets is a significant variable.

I should note that we’re responsible to raise all of our own money to build our ships. Unlike Washington State Ferries or Alaska Marine Highway who receive funding from the U.S. Government, and the B.C. Inland Ferries operated by the Ministry of Transportation and Infrastructure, we get no money for shipbuilding and must fund all improvements to the ferry system from our own sources. So our capital plan and the number of new builds we have in that plan play a large part in determining the rates.

Back to your question about increasing capacity, we recognize that the system is full. We’re going to the BC Ferries Commissioner with a growth plan to expand the size of the coastal ferry network. This will be the first major expansion of capacity in 15 years.

The capital plan proposes to add to the fleet incrementally. For example, of the 11 or 12 major vessels currently in operation, if we retire five, we’ll build six; for the minor vessels, we have a strategy called “Two-for-One” which will see one medium-size ship replaced with two smaller ships which will add roughly 50 per cent additional capacity. The advantage there is that we won’t need a major reconstruction of terminals and local road networks won’t require upgrades either because traffic off each vessel will be metered better.

BCSN: Will this mean an increase in crew?

MC: We don’t know at this time as that will be up to Transport Canada who sets the crew requirements. However, it shouldn’t be more because the smaller ships are easier to operate and will be more modern with better technology.

BCSN:Could you provide an overview of the upcoming new builds?

MC: Sure. In addition to the three new Salish Class vessels we brought in, the refurbishment of the Northern Sea Wolf is just wrapping up and will be entering the fleet in the coming months. The Spirit of British Columbia just returned from a mid-life upgrade and conversion to LNG and the Spirit of Vancouver Island is just about to undergo the same. There are a couple of world firsts related to this project: not only are they one of the largest passenger vessels to ever be converted to LNG, we believe they are the only ships converted to LNG-mechanical propulsion (usually, it’s LNG-electric). In addition, there is the new conceived in B.C. technology that allows for on-deck fuelling. That’s never been done before.

We’ve got two ships under construction right now — one for the Texada Island/Powell River run and the other for Port McNeill/Alert Bay/Sointula — these are the first two of the Island Class electric-hybrid ships. We currently have a request for pre-qualification issued for replacements of the Bowen class — the Bowen Queen, Mayne Queen and Powell River Queen and we’re proposing to replace those three with five new ones — four Island Class electric hybrids and one Salish Class vessel.

These new builds highlight our strategy for reducing and standardizing the number of vessel classes we’ll have. It not only standardizes training, parts and repairs but it also takes about one year out of the procurement process as the design and specs are already done. It’s an enormous efficiency improvement.

After the Bowen replacements, we’ll be moving straight into a major vessel replacement program for the venerable C Class — Queen of Coquitlam, Queen of Surrey, Queen of Cowichan, Queen of Oak Bay and Queen of Alberni. They’re the backbone of our fleet and we love them but they’ve been running since the 1970s and 1980s. By this time next year, we’re hoping we’ll be out in the market with a request to build six major vessels to replace those five, possibly even seven because we’ll have to retire the Queen of New Westminster soon as well. These are big ships – in the range of 350 AEQ, 2,100 passengers, 21/22 knots.

When you think about it — and in context of our vision for the company — these major vessels will be connecting communities and serving the people of B.C. for the next 50 years. They will represent the backbone of the coastal ferry network through the middle half of this century. I want to trigger in people the sense of import about how significant this is for coastal transportation for B.C.

BCSN: That leads me to ask about the type of propulsion and power generation you’re planning for these.

MC: We’re always looking ahead and are mindful that the future is low carbon so we’re driving toward that. We recently released our Clean Technology Adoption Plan which describes the initiatives we’ve undertaken to date with over $350 million invested in clean technology in the last five years; and our commitments for further carbon reduction and more environmentally sustainable operations. You won’t find another ferry company in North America who’s done more than us.

Right now, the best technology available for medium- to long ferry routes is a natural gas-diesel dual fuel option, such as you see in the Salish and Spirit Classes. Because these ships are going to be with us a long time, we’ve put in engines that can burn LNG, the cleanest burning marine fuel available.

For the Island Class vessels, they are designed with diesel-electric hybrid propulsion, with space for extra battery banks to move to electric operation in the future. The ideal would be to go full electric on shorter routes but we first have to get the hydro power to the docks. The expandable battery capacity will allow conversion to operate fully electric when the time comes - i.e. when a proven and reliable shore power transfer technology is available.

BCSN: Electric will help not only with carbon emissions but with underwater radiated noise I imagine.

MC: Correct. We’re a founding member of the ECHO Program and we’ve been very engaged with the federal government and all stakeholders to address the Southern Resident Killer Whale issue. Because we have so much activity in the Salish Sea, BC Ferries is probably one of the biggest emitters of underwater noise because of our frequency on the water and we recognize our responsibility to be a leader in this. Every new ship built will be much quieter than its predecessor — the Salish Class vessels are the quietest ships we’ve ever had.

There are other initiatives that focus on reducing our environmental footprint as well — for example, we no longer use underwater coatings with chemicals that can leak into the water; and over the last 10 years, we have converted the majority of our fleet to pump ashore systems for discharges. There are only two remaining but both have very good treatment plants.

We’re dedicated to moving through the environment without consuming the environment. We want to be part of a harmonious eco system.

BCSN:When you issued your last RFQ, you specifically encouraged Canadian and B.C. shipyards to participate. Could you provide some insights into efforts to support local yards, including your efforts through the Association of BC Marine Industries (ABCMI)?

MC: We’re huge supporters of the marine industry in B.C. and spend about $150 million per year here for ship repairs, conversions and upgrades. Only the Royal Canadian Navy spends more on ship repair in Canada than we do. From our point of view, the most desirable outcome by far is to build locally but we’re duty-bound to do what’s best for the ferry passenger — the ones who are ultimately paying for the new ships. If Canadian shipyards don’t bid or can’t submit a competitive proposal, we have no choice.

By getting the most competitive bids we can build more ships on time with higher value for ferry users. Sometimes that is local and sometimes it’s international. The new government has shown some interest in supporting the shipbuilding industry but the way to do that is not by forcing BC Ferries to build inefficiently, but rather by getting the shipyards to be as efficient or as competitive as international yards. BC Ferries has been used four times since 1960 to stimulate shipbuilding; each time the shipbuilders have closed after the government projects were complete. That is not a great track record. Let’s not repeat the mistakes of the past.

That’s where the ABCMI has proven to be effective. BC Ferries is a founding member and I’m a past president and one of the key messages we’ve been trying to get out is that B.C. yards need to work to their strengths to be able to compete with international yards. For example, B.C. yards will never be able to compete with China when it comes to steel bashing. And if it’s not China, then it will be Vietnam or the Philippines, etc. But steel bashing is a low-tech product. The industry here shows strength in the high-tech side of shipbuilding — the high-skill, high-value green technology components. BC Ferries works extensively through ABCMI and membership there is one of the best ways to learn about our needs in projects.

A good example of this already in place is the contract between Damen Shipyards and Point Hope Shipyard to outfit the first two Island Class vessels currently being built. Damen will deliver the ships to Point Hope who will do some of the final commissioning.

BCSN: I’d like to turn now to the shore-side infrastructure. Could you describe future plans for the terminals?

MC: We have community consultations ongoing now at both Horseshoe Bay and Swartz Bay. Swartz Bay is driven not so much by vehicle capacity as it is by foot capacity. The buildings, layout of the lounges and the drop off zone are a bit inadequate for the foot passenger volume we’re seeing today so there is some efficiency to be gained. Otherwise, Swartz Bay is in pretty good shape with five modern berths.

Horseshoe Bay is more of a challenge. It’s very constrained — we have a major intersection on one side, the ocean on the other, a cliff to the right and a village to the left — and it’s one of our busiest terminals. We’re looking at an investment potentially upwards of $200 million. The berths and the terminal date back to the 1970s. While the terminal was rebuilt in the 1990s, that was well over 20 years ago and there are better ways of easing the congestion — for example, using our reservation system more strategically to allow traffic to be staged more rationally so that passengers can show up 30 minutes prior to sailing instead of waiting for hours. This will also mean a redesign of the staging area.

Another big change will be the installation of active lift berths with ramps mounted on hydraulics that actively compensate for the change in the draft of the ferry as its unloading. The current berths at Horseshoe Bay are still the 1970-style hanging berths — every time the ship changes draft, they have to stop the traffic, make adjustments and then get going again. That will be a big part of getting efficiency out of the terminal. We expect to start construction in the early 2020’s.

BCSN:Earlier, we touched on crew and a higher quality of jobs on the new vessels. I’d like to ask first about recruitment (are you finding enough employees to counter retirements?) and second, about training, especially for the new vessels and their different technologies.

MC: We have over 4,000 employees and there will always be retirements but we work hard to capture the knowledge of retirees before they leave through mentoring and apprenticeship programs. We have also grown our training program over the last three years as we encourage people to move up internally.

In terms of recruitment, we’re reaching out internationally in addition to local and national searches. The Canadian market is just not supplying enough mariners. It doesn’t matter what part of the country you consider, everyone is short of mariners so we need to look outside of Canada where appropriate to do so. I won’t sugar-coat it though, it’s a challenge. We’re chronically below complements, probably by about 20 or 30 vacancies for marine crew at any given time. We’re compensating for vacancies with people on overtime. That’s not a long-term solution.

One thing that will work in our favour going forward is the standardization of classes. We’re moving from 17 to five which will standardize training and allow for less disruptive transitions of crew between ships.

Of course, our employees are dedicated to making sure safety is always our highest value. Last year we won the Marine Employer of the Year Award by Safety at Sea Magazine in London and we also won the DuPont Global Safety Award which is given out every two years to a company in any industry, anywhere in the world.